From 4plex to 1,200 Units: How Caleb Johnson Built Generational Wealth Through Multifamily | EP26 –

In this episode of The Wealth Clock Podcast, host Steven Weinstock speaks with Caleb Johnson, founder of Red Sea Capital and host of From Trial to Triumph. Caleb shares how he went from being a C-student in high school to owning and managing more than 1,200 multifamily units across four states — all before turning 30.

He walks through the steps that took him from his first 4plex house hack to raising capital for large commercial properties, explaining the lessons learned along the way about discipline, mindset, and investor responsibility. Steven and Caleb dive into the realities of syndication, the benefits of vertical integration, and how creative financing and seller carrybacks can turn tough deals into profitable investments.

Listeners will learn:
• How to start with small multifamily properties and scale up
• The right way to structure syndications and joint ventures
• How to find creative financing opportunities with sellers
• Why mindset and emotional discipline matter in every deal
• How to protect investor capital in uncertain markets

This episode is a must-listen for anyone serious about building long-term wealth through real estate. Caleb’s story proves that success in this business isn’t about where you start, but how you think.

Guest:
Caleb Johnson
CEO & Founder – Red Sea Capital Group
Podcast: From Trial to Triumph
Website: https://redseacapitalgroup.com
LinkedIn: https://www.linkedin.com/in/caleb-johnson
Instagram: https://www.instagram.com/redseacapitalgroup

About The Wealth Clock Podcast:
Hosted by real estate investor and fund manager Steven Weinstock, The Wealth Clock features in-depth conversations with top operators, founders, and capital raisers who are building real results in real time. Steven is the founder of We Capital and the We Capital Mortgage Fund, which invests in first-lien positions secured by real estate. His goal is to help investors earn consistent passive income while protecting capital through conservative lending and disciplined management.

Follow The Wealth Clock for weekly conversations on real estate, investing, mindset, and wealth-building strategies.

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🎙 About Steven Weinstock
Steven Weinstock is a real estate investor and founder of WeCapital and the Goethals Capital Fund. Since 2001, he has built a diverse portfolio of residential and multifamily assets while helping investors access passive income through strategic real estate opportunities. On this podcast, he shares real-world insights on investing, capital raising, and what it really takes to build and scale in today’s market.

📩 Want to invest or get in touch?
Visit: www.WeCapitalX.com

📱 Connect with Steven:
LinkedIn: www.linkedin.com/in/stevenweinstock1

Instagram: https://www.instagram.com/wecapitalx/
YouTube: https://www.youtube.com/@TheWealthClockPodcast

Transcript

Steven Weinstock: 0:02

Hi everyone and welcome back to the Wealth Clock podcast with Steven Weinstock. I've been investing in real estate for over 20 years. Started off with single family homes, multi-family properties, and recently launching my own real estate investment fund. This podcast is brought to you by We Capital, which is my company and the We Capital Mortgage Fund. We invest in first lien positions secured by real estate. Our goal with this fund is to protect investor capital by staying at 60 or 65 loan to value on these properties with monthly distributions. It's a simple model that helps keep working capital safe, and I'm really enjoying the non-property management aspect of this real estate investment. This show is not about me, it's about operators, founders, and closers who are building real results in real time. Today we have Caleb Johnson, founder of Red C Capital, and the host of his own podcast from Trial to Triumph. Caleb has built real ownership in multifamily at a young age. He looks pretty young over here. If you're watching on video by focusing on creative deals, relationships, and discipline operations, we're going to get into it with Caleb. Caleb, thank you so much for coming on.

Caleb Johnson: 1:24

Hi, Steven. Thank you so much for having me. All right. Where are you zooming from? I am out of Phoenix, Arizona. Got it. Was born in Lubbock, Texas, but been in Phoenix most of my life.

Steven Weinstock: 1:34

Got it. Okay. I know Phoenix is always sometimes a hot market, but sometimes not so hot. The weather is I guess always hot over there. How'd you get into real estate?

Caleb Johnson: 1:43

I got into real estate. I'll start with a story. My, I. Coming outta college, I was a CC student or outta high school C student. Didn't know what I wanted to do. I had two, three jobs, so I could work, but there was a moment. My parents are blue collar and nine years ago, my mother she grew up with mentality of go to work, get a safe job, work until you're 65, and then retire the happily ever after. But nine years ago, had a surgery. She did. Which required her to take a sabbatical to recover. Being a single parent, having no support, no investments, no active income, lived off savings until she ran outta money. So it was forced to go back to work just to pay the bills. And I remember that was after three months and Steve, and I remember seeing her come home every day for that first week of going back to work, having tears in her eyes. From the pain and seeing that I was 18 seeing that made me realize if I don't do something different from her, that's gonna be me. And then got into multilevel marketing, but then learned that 90% of millionaires got their millions through real estate investing. And that was a moment I decided, okay, let's do this. Got introduced to BiggerPockets, learned that way for about six months. Just, listening and learning that way. Then found a local mentor, helped me buy a fourplex that was a house hacked. And then did that a couple times and then after three years of residential scaled into commercial.

Steven Weinstock: 3:15

Got it. And when you say commercial, you mean multifamily, right?

Caleb Johnson: 3:19

Yeah. My first commercial was retail 18, 19,000 square feet of retail, but then seven multifamily acquisitions. Since then.

Steven Weinstock: 3:30

Got it. Got it. So your first deal was a fourplex Correct. And you said you house hacked. So just tell everybody here what house hacked means.

Caleb Johnson: 3:37

What house hacking is when, let's say you buy, it could be a single family house or usually it's a small multi-family, so 2, 3, 4 unit. You live in one unit, you rent out the other three. Since it's residential, it's deemed com it's less than five units, so it's deemed residential, meaning you can live in one of the units, but since there are, let's say a fourplex, there's three other tenants paying rent, that means you can use that rent as qualifying income. Plus, since it's owner occupied, meaning you're gonna live in one of those units. It's, you can go FHA three and a half percent down payment, so it's a very low barrier to entry. You can get a lot of real estate for a little amount of money, and it's a great way to start.

Steven Weinstock: 4:19

When you're buying a piece of real estate and you're living in it. It's owner occupied, and therefore , interest rates are gonna be a little better. The loan to values will be a little higher. They'll give you typically it's 80% but you mentioned FHA, it could be 5% or 3%. And when it comes to an investment property, you're typically not gonna get more than, let's say, 75 from a regular lender. Obviously there's, other kinds of loans that will give you higher and, you're able to live in one of these for a year or two, and then you could, move out and do it all over again. And you keep the loan in place.'cause these are typically good 30 year loans. Is that what you did? Did you buy another one and move out?

Caleb Johnson: 5:00

Correct. Yeah. You had to, you have to stay there for a year. And then I sold that, I believe it was after 18 months rolled. I did a 10 31 exchange, rolled those proceeds into that, that retail facility house hacked again with a duplex that was about a mile, or excuse me an hour from the main phoenix, MSA. So I was in the boonies in Arizona. And so I did that house hack strategy twice.

Steven Weinstock: 5:24

I know on BiggerPockets there's a lot of house hack talk. And it's a tremendous strategy where you actually have a lot of people who get into real estate what I call accidental landlords. So they're house hacking without realizing it. And then once they're living in that situation, once they're doing numbers every single month, now they're really figuring it wow. These other guys are paying my rent or paying my mortgage paying down the debt, the value's going up. And it's just, it really helps people grow. But when you're in it you really learn. It's there's a lot of theory and all that, but when you're in it, there's nothing like that. It happened with me when I started. My goal was to buy one single family home. I was still a kid, I was living at home with my parents. I had a corporate job and my goal was to buy one single family, get a 30 year loan, and pay it off over 30 years. And when it's time to retire, I would have what I would call an ex an extra 401k where I could just sell this property my, in full it's paid off and I could still live in my current house, wherever that would be when I'm 65, I wouldn't have to downsize. And make some money along the way. And real estate is it's an industry that everybody wants to talk about. People ask me who do I talk to when I talk to investors? It's everybody. It's not just real estate professionals. Everybody loves real estate. They wanna talk about it. Doctors, lawyers, plumbers, contractors. Everybody loves real estate. And I have people all the time, over the last 25 years, just always talking to me, asking me questions. For most people, even if they're a high income a W2 when it comes to a house, it's typically the biggest purchase that somebody's ever gonna make. So when they hear. People are doing it over and over again. It really sparks this interest and real estate. Like you said, most millionaires are millionaires because of real estate. I will deviate. I think when in your in your comment you meant, you said most real estate investors are millionaires because of real estate, but I would say that most millionaires. Are from real estate because you also have a lot of people who just own their one home that they own. And next thing you know, they wake up at 65 years old. This house that they bought for, 400,000 is now worth 1.3 or something similar. And they wouldn't call themselves real estate investors, but their net worth is really ballooned because of real estate. And if you could just duplicate that once, which was my plan originally, you're really doubling up or then you go 2, 3, 4, 2000. You mentioned you transitioned to multifamily. Are you buying multifamily in the Phoenix area? Are you outside?

Caleb Johnson: 8:06

My, my seven multifamily acquisitions have been across four states. So one in Oklahoma three in New Mexico one in Nevada. And then. The rest have been in Arizona. We actually I haven't bought a deal in Phoenix until. Four weeks ago from the time of this recording but did own as we currently own an asset in Tucson and then Sig Grande Arizona, which is in the middle you got Phoenix and then Tucson South, soon Tucson's the secondary market. Sig Grande's tertiary market. But it's very well positioned and seeing a lot of growth. But at this point, Steven, we are focused on multi-family acquisitions in Phoenix.

Steven Weinstock: 8:47

When you say multifamily, are you referring to smaller, larger? Do you have a certain buy box that you know, if it's less than this amount of units, you won't even consider? I know. Tell me a little about what the typical makeup of the portfolio is.

Caleb Johnson: 9:01

So we focus on five to a hundred. Which isn't what most people do. Most people will say, oh, I want to be a hundred plus 150 plus 50 units plus or whatever. Or they'll give a larger range. But starting off in this business, in commercial. Five years ago, I, how I started was finding opportunities, maybe raising a little bit of capital as well or contributing how I could, and then getting a small piece of the GP general partnership if you haven't heard of that before. And then did several deals like that. And a couple things have happened. One is it's hard to pay your bills when you own 3% of the deal. Second is that a couple of those deals I haven't been pleased with the lead and how they've worked that out and, when when you're not the lead when you don't have much say and even when there might be poor asset management and that's just my opinion. I'm not gonna name names it's my investor's capital is in that deal. If they aren't getting the return that was projected, I look bad. So at this point why we're focused on that specific unit range. Not institutional five to a hundred. It's more mom and pop, but that size we can demand the lead, right? We are the lead. We're also vertically integrated. That means we can do a lot of the pieces, the asset management as at risk capital the acquisition side of the gp. Also raising most of the funds since we've built so many connections over the years. That's why we're focused on that. And then with the purposes, since we own the biggest piece of the pie, 'cause again, if you're gonna be a successful gp, in my opinion, you have to have, you have to get to the point of having the majority ownership of the gp. That's how you make the most money. So that's what we're working on with the intent as years go on. So where we don't need partners. Where we can be our own PE shop and focus on 150 unit deals, plus have in-house attorneys, in-house CPAs. That's the end goal, Lord willing. God might have different plans, but that's why we're focused on that size.

Steven Weinstock: 11:14

Got it. You're, when you're raising capital for these deals, are they structured as a fund? Are they structured as real estate syndications where each investor is specifically tied to a specific property or deal? Tell me a little how that how you structure that.

Caleb Johnson: 11:29

I focus on syndications and joint ventures, so depending on the size, depending on what we need usually we like the syndication route because if you go the JV route everybody has voting interest. Not that we don't want people to vote, so I'm not saying that's a bad thing. For the certain type of deal, it's a great thing. It's a great thing. Whenever we have a syndication, let's say we have 20 passive investors they're completely passive. We run the show with a couple, usually select a few cogs, so we've leaned more towards the syndication route. At the same time, we will have a structure as a jv, depending on the right deal and depending on the right partner.

Steven Weinstock: 12:07

Got it. And as far as the structure for passive investors I fully understand, too many cooks in the kitchen when it comes to decisions is not a good thing. Sometimes you just need one or a team of a few making the decisions. And you do have a lot of investors who wanna be passive. What kind of structure is it typically for LP investors that you're dealing with?

Caleb Johnson: 12:28

Do you mean in the promote?

Steven Weinstock: 12:30

In the promote? What are they getting? They're, say you're buying a $4 million deal. You're raising, I don't know, a million dollars and I'm a guy, I'm one of your 20 guys and I'm giving 75, a hundred thousand dollars to make it simple. What could I expect? Typically I understand every deal is different, but gimme a rough generic template of what I could make with that a hundred grand.

Caleb Johnson: 12:50

Typically our syndications is a three to five year hold. However we go. We go after distressed assets. We just acquired a property in Phoenix C minus neighborhood. I'm gonna scare a lot of people when I say this. C minus built in the forties a hundred percent vacant bank owned. Lot of hair on that deal, but what our projected ROI is for investors is usually, I'd say from 17, 17 plus percent, if there's more hair, there's usually more incentive. It's a 70 30 split with with investors. So with passes receive 70% of the entire deal. US active investors typically receive 30, i'd say somewhere between eight eight plus cash on cash return. And then the, let's just call it 20% a year, right? That's including the equity on the backend. That could translate to a two X equity multiple. However, with the intent to give investors the highest ROI in the shortest amount of time we give a window because one, it gives us flexibility. You're an investor as well, so Yeah, sure. You can't say I'm selling at year five. Hard stop things happen. Yeah.

Steven Weinstock: 13:59

COVID might happen. Rates yeah, rates will change. a a i'm in a deal that was supposed to be a two to three year hold rates changed and now it's a five, hopefully just a five year hold. But if it has to be more, it has to be more, as far as the structure for the LPs, are you ever offering preferred returns or is it just whatever's left over at the end of the month or the end of the quarter gets a distributed 70 30

Caleb Johnson: 14:23

usually? There's no pref, however, it again depends on the opportunity. Got.

Steven Weinstock: 14:29

Yeah. No, I've I've done the most of my deals with breath on the multifamily. It's tough. Because sometimes your interest, the GPS interest is, I don't wanna say not aligned with the LPs, but you have a lot of LPs, especially on the mom and pop side, who really care about that distribution, the pref. And as a GP, sometimes it might pay. If that's the right word, to, pause distributions for a quarter or two to better position the property. That could be an awkward conversation with investors. And again, if they're not sophisticated and I use that word nicely. It just leads to bad bad karma. I've seen I've seen some of, the top, operators. They don't offer a pref because they just have people lining at their door to invest with them. a lot of people, most people are offering a pref. If you're buying a deal that is vacant I'm assuming the pref will accrue or are you figuring out a way to pay it? Day one.

Caleb Johnson: 15:29

If there is a profit, it does accrue.

Steven Weinstock: 15:31

It does accrue. Yeah. Sometimes on these deals that are, a big heavy lift development deals there's no income, for a year or two. So there really is no money to pay the distributions day one. Accruing on the backend or accruing when the money starts to produce is a very normal route. And do you ever deviate from multifamily or is that your, is that, we ride or die?

Caleb Johnson: 15:57

Like I said, our, my first deal was a a retail facility. I do I'm very opportunistic, however I'll give you a an example. We looked at a deal in Knoxville, Tennessee, a double net lease deal warehouse, and it was like a step in 10 cap. And, baked in. Rent growth looked very easy. Boiler plate, everything's renovated. It's ready to go. We almost did that deal, but something else, another opportunity local came up. So we are opportunistic. However I wanna build a business. A foundation business that investors can rely on, they can invest in those deals. Repeat because as it's hard. We want to have our, we want to have our interests align with our investors. And when investors see us doing deals in so many different states all at the same time. F this is and I'm not bashing anybody that does this because some people have fantastic business models that revolve around that, and that's their niche. So I think you can make money in any type of asset class, but for our business, we want to focus on one market primarily. And it's just a repeat system because we get great broker relationships, and it's just the play that we're leaning into. It

Steven Weinstock: 17:13

actually reminds me a couple weeks back I interviewed someone on the podcast who was instrumental in REITs back when the REITs really took hold in the early nineties, and he was explaining to me that it used to be that. The REITs were, there were REITs out there that were just a hodgepodge of different assets. We'd have hotels and theme parks and apartments, and as opposed to what today where it's really really specifics. Today you'll have prologis, which are, just warehousing and you'll have multifamily and you'll have office space. But when I first started, you had these REITs that would really invest in everything. He was telling me the story that when it came to earnings calls and they would have these big conference calls with investors. You'd have a guy from one of the, one of the analyst firms saying, okay let me speak to your multi-family guy. And they would ask Fred, let's say his name was Fred. A bunch of questions. Okay. That's great. Now let me pivot to hotels. Let me ask about hotels and who's your hotel guy? Yeah, it's me. It's also Fred and they would have Fred get up there, so to speak and talk about shopping centers. And the multifamily and the analysts were queasy about this. They didn't like the fact that, this one guy, this one company, it could have been a big company, but that they just dabbled in everything. And after that it really started segmenting to, office and, separate retail government leased properties, real specifics. You're definitely not wrong in staying in your lane something you're comfortable with. Creative financing, if you're dealing with zero, five to a hundred units I like those types of properties. I own some larger ones, but I do own some properties in that in that box as well. What I like about those is that I feel you have less when it comes to. Buying the property, there's less institutional inst interest in it. So you'll have less fun. You'll have some big players totally not interested in buying it because it's just too small for their fund that they have. And you'll have a lot of mom and pop investors or smaller investors who are buying those types of properties. And again, mom and pop, I, I don't say that in a small negative way. You could be a mom and pop investor and, have $150 million in assets under management. But those types of properties since you're dealing with these types of investors and owners and sellers there's more room for cre creativity creative financing. Talk to me. Ever deal with anything creative, anything, any seller holdbacks, any wraparounds. Getting the seller to keep his equity in the deal just to make it work for you.

Caleb Johnson: 19:50

Yeah, we've absolutely explored that. Whenever we have a broker send us an opportunity, one of the first questions we ask is, are they open to seller caring? Some people are, and sometimes the broker's initial response is no, because they just want it quick, clean, and easy. That doesn't mean we're not gonna offer seller financing in an LOI, we might offer two lois, one with seller financing and one with not. We haven't structured our, the retail investment. That we acquired was a seller carryback. I'm not the lead on that. So I wouldn't say I, I have a great deal of experience with it.'cause most of our deals have been typical bank loans. But we absolutely try to find that lever that we can pull, because at the end of the day, there's always a cost of capital. If, when we do these deals right, you get first loan, let's say it's 75% load of value we're gonna go raise the 25% plus other cost down renovations, act fees, closing costs, things like that. But if we can, let's say, and I'm gonna pay an investor 20%, right? A retail investor, 20%.'cause they're on the bottom of the capital stack. So if I can go to the it's kinda going to another investor, right? The seller. He's technically an investor. He is gonna give you a big chunk big chunk of cash. If I can go to him and say, Hey, I'll give leave 25% in the deal. I'll give you 6% or whatever the interest rates are, right? It has to be, it has to be fair and worthwhile, and we can offer whatever we want. We could interest rates could be at a six and we could offer him 4%. It's all a negotiation. He can come up and say five and a half and we'll say, let's do that, because again it's saving me from having to pay an investor 20%. And that's 20% including equity, right? There's cash flow. Let's say cash flow is seven, 8%. So if we pay one investor that brings 20% of the equity, five point a half percent, I'm paying my retail investor seven point a half. That makes a lot more sense for everybody. And if the seller's happy, then we'll do that just comes down to asking.

Steven Weinstock: 21:57

Sure. And usually when you get a seller to do a carryback. To do owner financing. They're not charging up points and sometimes they don't need the appraisal or, they're not gonna be too strict with environmental since they already own the property. So yeah, dealing with the seller is great. I've bought tons of properties, especially on the smaller the smaller properties with seller financing. There was a time in my life where I was strictly just making offers all day long with seller financing components. It was a numbers game, so I was just generating offers on a regular basis. And I didn't need a hundred percent of them to hit, to sellers to accept I just needed one every once in a while. And it's been creative financing is great and actually learned about it from like an an infomercial. It might be too young to know what that is, but back, like in the nineties,

eighties at 2: 22:43

00 AM in the morning. On regular channels on tv, the programming stopped. So they'd put these like 45 minute commercials and you'd have people selling blenders and you'd have people selling real estate books and, back when the Rich Dad, poor Dad came out, he had this like 45 minute commercial about the book. And that, that was my introduction to to Rich Dad, poor Dad. But he had other real estate guys. Go on and talk about this. And I learned a lot watching those commercials at 2:00 AM when I should have been studying for school. Tell me about. I guess your mindset when you are looking at a deal that you really want how do you stay neutral and not too emotional? I know I've been guilty of that myself, but sometimes I get emotional about a deal. I put so much effort into it and I just want it to work. And then, I don't know, maybe the pieces start unraveling before you get into it. Especially if you have a hard deposit. Anything like that happen?

Caleb Johnson: 23:38

Absolutely. And I love talking about mindset. That's something near and dear to my heart. That's why the podcast is called From Trial to Triumph, because I think it, it starts with mindset. We have to be in the right mindset. Otherwise it's not gonna go well for the long term. I, we've experienced that several times. We just toured a property on Saturday, three, four days ago, and, we're gonna submit an offer, but after an hour of just processing deals that we're currently working on, it's just gonna be too much at the end of the day. I'm willing to be more risky with my own funds, a couple grand of EMD or whatever the dollar amount is of EMD attorney fees, closing costs, things like that, we can risk that. But when it comes to the thing, personally, I'm not willing to jeopardize is investor capital. Because getting into A deal just to get a deal done, I'm seeing less of this where people will, buy a deal just for an acquisition fee. And then look for the next one. Look for the next one. Look for the next one. I think a lot of those operators have gotten weeded out with COVID and interest rates rising. But that's very near and dear to my heart because my mother is invested in two of my deals. We have to be I'm an underwriter at heart. I like numbers, so I'll try to kill every deal, especially on the front end when looking at this thing. So it's, it comes down to that moment where em d's hard closings, let's say a week or two weeks out. And if something pops up where, hey, renovation just went up 30% now investors are gonna be making 10, 15%, not 20%. You have to be able to back out. So I've run into some situations like that where absolutely we're under contract. We spend some dollars and lose that because it just does not make sense. But you have to, if someone's not willing to do that, you're not gonna go far hard. Stop.

Steven Weinstock: 25:37

Talk to me about property management. So you have a property, you have tenants residential tenants in a 26 unit building or a 83 unit building. Who's handling the property management? Are you offloading that to a third party? Are you vertically integrated and doing it in-house? I dunno. Tell me, what are you doing?

Caleb Johnson: 25:59

Yeah, we have done that before, third party management. But since we are in Phoenix, we found this it's very advantageous for us to be vertically integrated. And of course there's more risks with that and more time investment and headaches. With that. This is what my wife and I do full time. And that's really my wife's baby is the property management. But yes, we are vertically integrated. And it, again, it just comes with additional risks. It's another business. We, one of the first property management companies I met five years ago was their, they were called Cow Kappa. Since I've been bought out through asset management or asset living. I think asset living and they started owner operators vertically integrated, but then started bringing on additional contracts as a third party and then grew that to being a second business. That's not, if that happens, great. That's I'm an entrepreneur, so if that does happen. Love to do that. But at this point we're vertically integrated just for our assets solely.'cause again, that's aligning our interests with investors. We can be a bit more favorable as well when it comes to property management fees. But that's our plan and that's what we're going forward with on our local assets.

Steven Weinstock: 27:18

Yeah, so I'm in the same boat. I we don't use third party management and. As much as keeping it in-house is important especially on c plus B minus types of properties built in the forties, you're gonna have lots of repairs. You're gonna have lots of issues just on a regular basis and in order to control the costs. You really have to be the property manager because you'll have a third party. Just to give an example, you'll have a third party manager who gets a call about a broken hot water tank for, a tenant. And I maybe to replace it as, I don't know, $1,500. But as you, the owner and or self-management, you might send your plumber who can maybe tinker with it for, $400 or $200 and get it done. Or you might be able to take some of these repairs and defer it strategically in order to help with cash flow as opposed to a third party where it's just, every time the toilet needs to get plunged, it's, 150 bucks because he's calling the plumber. So there definitely is, again I'm doing management. What I say is, I'm doing it all day. I'm fully involved in the property management of the business. There's a lot of negatives to it, I have to admit. Some of them are some of the big reason, some of the big negatives is that it takes away my time from potentially bigger fish to fry. It's where I found myself. I embrace it and I feel that, I need to do it in order to. Make these properties work and we're having some success with that, but it really is it really is a job. And it really takes up a lot of my time, I have to admit. And I'm not in the Class A space, I'm not dealing with luxury properties or luxury apartment buildings. But I, I would say that if you're buying Class A built in, 2019 or 2023 there, there is a, there is a reason to have third party management. You're dealing with better tenants better. Collections and potentially a lot less repairs that would need to be done. But again, buying Class A is sometimes just, like a fund, it's like hitting singles, buying not too many home runs unless you get lucky with the location. But yeah, management is very tough. And if you said you your wife is taking care of it, I can only imagine, there's stress. You look away from your phone or computer for a couple of hours and who knows what's happening and depends how integrated she is into it. And, while I am not getting the phone call at 2:00 AM about an overflow toilet, I am sing that the phone call happened, the next morning when I look at my computer. I'm not dealing with it, but I am I do know about it. Involved in every aspect, every email, every, almost every refrigerator that's breaking. I get to see in my email somewhere and sometimes I have to approve it. But that's going off on a tangent here.

Caleb Johnson: 30:08

Yeah, I think it really helps align interest with investors. And one of the reasons we, we went this vertical integration path was because once you deal with enough, I've had good managers and I've had. Not so good managers. And like you said Steven, they can nickel and dime you. It's, oh, this is a 1500 water heater fix. Let's just fix it. Compared to, yeah, let's just send a plumber out there and see can we tinker with it? So we, it's, it aligns our interest with our investors and at the end of the day, nobody cares for your property like you do. So there's. Again, pros and cons to it. And I think it takes, you gotta be willing to take on that burden. And we've had experience managing our assets before and tenants in C minus neighborhoods. And to your point, you got Ds different from an A and Cs. To BES and 150 plus units different from a 10 unit. So it's, you have to know the business, you have to be comfortable with it, and I think really have experience with that and knowing what you're getting into. If I'm interviewing for third party, if somebody has experience managing class a 150 unit deals, I'm not gonna let a manage my 10 unit in a C neighborhood. It's totally different. So you have to have that industry knowledge.

Steven Weinstock: 31:29

Yeah. No, IFI fully agree. I fully agree. What kind of bank debt are you typically getting on these properties? I'm assuming you're with, with the sm with the a hundred unit less, you're probably not necessarily dealing with agency debt, Freddie Mac and Fannie Mae debt. Are you dealing with just bank debt, credit union debt as far as, the first lien position on the capital stack? What's your typical go-to?

Caleb Johnson: 31:54

Typically we're gonna shop it with a broker. And if we can go agency, then we will go agency. Because factoring in disposition, if we can have a summable financing on there, then that's great as long as interest rates align. So it really comes down to whenever we're underwriting a deal it's understanding. Okay, what's the current state of the property? High? I don't need to be as experienced as a, broker as a lending broker, but I do need to know the basics. Do we gotta go bridge? Can we qualify for agency where our interest rates at currently? But we're gonna try to go agency for as many deals as we can, and we can get pretty flexible, even with the size of asset agencies. Not an issue. They just have certain requirements and it's knowing those. But then we've used credit unions before, regional banks. It just depends on, usually it's what the best terms are. Another factor though, is that we don't wanna be retraded at the finish line because if you're expecting 70% loan to value, and then a week before close they say, Hey, 60% is where we have to be. That's, that can be massive. So it's. Reach the re trading is very important to us as well as terms.

Steven Weinstock: 33:12

Got it. Caleb, I had a great time talking to you. Tell my listeners where they could reach you how they can get in touch with you. You tell us you tell us. We'll put it in the show notes, but go ahead.

Caleb Johnson: 33:23

Yeah, if you find us at Red Sea capital group.com you'll see us there and we have a free due diligence checklist. There's me introducing the due diligence checklist. And if you think I look young here, man, I look like I'm 15 years old in that video, so we're currently fixing that. But find us there. You can find us on LinkedIn, Caleb Johnson, and happy to answer any questions that you have. But thank you for listening. And Steven, thank you for having me on the show.

Steven Weinstock: 33:48

Oh, it was my pleasure. It was my pleasure. You said Red Sea Capital. Where'd you get that name from?

Caleb Johnson: 33:53

Red Sea capital group.com. And that comes from Moses parting the Red Sea. We want to be the reason we created that was we want to in a sense, part the Red Sea for investors to get solid, sustainable returns.

Steven Weinstock: 34:10

Okay. I'm definitely a fan of of Moses over there. And I love the name and Caleb, I I just wanna thank you very much for coming on. It was a fun conversation. Check him out on LinkedIn. He writes some good stuff and I've been following you for a while and I'm just happy you finally got on the show. People could connect with you on LinkedIn. Are you on the other social medias? Instagram TikTok Facebook, MySpace YouTube. MySpace?

Caleb Johnson: 34:36

Yeah. YouTube. You can find our podcast on YouTube. Instagram, red Sea Capital Group. Facebook, Caleb Johnson. But all of our stuff, our podcast, the podcast that I've as a guest speaker that I've been on is all at Red Sea capital group.com. So you can find us there.

Steven Weinstock: 34:52

Okay, Caleb, it was great having you. Thank you very much for tuning in to the Wealth Clock with Steven Weinstock. If you enjoyed this conversation, please follow the show on YouTube, on Apple Podcast, on Spotify. Share with your friends. Put it on your Instagram reels. Whatever it takes to get more people to watch. I really enjoy it and I enjoy hosting the podcast and it's a lot of fun and I get to speak to I get to speak to a lot of people who I might not otherwise speak to. And I learn a lot from this podcast. I'm having conversations with excellent people and it's really like one-on-one, even though people are listening. The phones are off or they're supposed to be off, and you're fully tuned in and fully engaged. It's been extremely valuable to me and I hope everybody else enjoys it. Thank you very much guys. I appreciate it. Thank you.